The Typical Person who owns a Condo Hotel
The Typical owner of a condo hotel can be segmented into one of two major groups: lifestyle enthusiast and investor.
Lifestyle buyers tend to purchase condo hotels at their favorite resort destination. They love the idea of owning a fabulous property at their favorite destination, but they don't want the burden of a second home sitting empty and draining them financially. They also are attracted to the idea of their vacation home being fully managed by someone else and being cleaned and in order upon their arrival. Additionally, because condo hotel ownership generally comes with major amenities and service benefits, the purchase makes even more sense. These types of buyers are true resort enthusiasts and tend to visit their property 5-6 times a year.
Investors, on the other hand, will buy regardless of whether the purchase fits their lifestyle. If the property makes financial sense, that is all they need to justify the purchase. For the pure investor, appreciation and cash flow are of paramount importance, with appreciation being the greater determining factor. In addition, the opportunity to own a hassle free investment that is fully looked after by a professional management company is another highly valued attribute.
Many savvy real estate investors have achieved fantastic appreciation gains over the years from condo hotels and continue to buy whenever a premium property comes to market. Some repeat buyers own upwards of 10 – 20 condo hotel units and look to add more every year. They love the concept of purchasing at a lower price point during pre-construction and then selling at a higher price point once the property has been in operation for a few years. In particular, most investors are drawn towards the name brand condo hotels, such as Trump, W, Hard Rock, Ritz Carlton, Westin, and the Four Seasons.
Incidentally, even among the buyers who would consider themselves investors, most stay at their property several times a year and enjoy taking advantage of the many benefits that come with being an owner. However, it must be noted that this lifestyle component is secondary in their purchasing decision. Ultimately, the decision to purchase is based off of their evaluation of the condo hotel's ability to appreciate and cash flow.
Demographically, the age of the typical condo hotel buyer is what you would probably expect. The average buyer is between the ages of 45 – 55, is married, has children still at home or in college, and has owned vacation property previously. The typical buyer tends to be more affluent and views the purchase of real estate as an intelligent way to increase wealth.
With that said, different condo hotel projects do cater to different sectors of that demographic and this will cause slight fluctuations in those statistics. Ritz Carlton's, as you can imagine, have great appeal to older members of that age group and beyond. W Hotels and Hard Rocks, along with their hip atmosphere, appeal to the younger members of that demographic, as well as to persons who have attained wealth at an earlier stage in life.
Condo hotels also appeal to buyers from around the globe. Europeans, South Americans, and Asians are all buying condo hotels in North America. They are competing with Americans for the best properties in the U.S., Canada, and Mexico. In fact, Europeans and Asians have quickly emerged as one of the fastest growing segments of condo hotel owners in North America. Aiding this trend is the weakened dollar. The citizens of these regions have flexed their economic might in recent years and have shown exceptional interest in the condo hotel model. In fact, half the units of Trump Waikiki, the most successful real estate project in the world, were sold exclusively to Asian buyers.
Condo Hotels vs. Condominiums
- Last edited October 12 2012
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